Why travel businesses should utilize data-driven marketing in tourism?

We have moved to an era where data is omnipresent and available to us with a few clicks. People are able to access desired information whenever and wherever they need it thanks to the various information technologies and the world wide web.  When considering the travel industry, not only are the tourists benefitting from the abundance of information but so are the travel companies. The tourists leave behind a great deal of traces (i.e. data) when considering, where to travel and what to do in the destinations. This available data in turn creates huge opportunities for the travel companies on how to communicate, interact and offer services for the tourists1. Essentially, this is what data-driven marketing (DDM) is trying to accomplish.

This blog covers what the DDM really means, and why travel businesses should take advantage of it in their marketing operations to stay competitive in the market. Its application brings many benefits for the travel companies, but this text highlights the 3 key benefits.

 

What is Data-Driven Marketing in Tourism?

Data-driven marketing is a marketing approach and a process of collecting complex data through online and offline channels that intends to analyze the data to understand the behaviour and purchasing patterns of the consumers. The data, which is gathered with the help of information technologies, assist to identify the needs and influencing factors of the consumers at each stage of their decision-making process. Consequently, the collected information supports companies to develop a marketing strategy and in connecting with their target audience2.

To understand DDM better, it is crucial to get familiar with the term “Big Data” that is nowadays often used with data-centric marketing due to the omnipresent information. Big Data refers to storing and collecting massive amounts of complex, structured and unstructured data, which is later used to gain a competitive edge by companies3. It offers the companies the capacity to collect and analyze data with an unprecedented scale and manner4.

Next in the following sections, I uncover how the era of Big Data and its influence can help travel companies to excel their DDM approaches. As a result, 3 key benefits of DDM are presented.

 

#1 Better understanding of the customers

Tourists roaming on the internet and communicating with their peers and their preferred brands entails of leaving a lot of information behind. What the travel companies can do with this information collected from various digital sources such as websites, social media, review sites and mobile applications, is that they can analyze it to better understand the customer. By knowing what their key customers want, desire, need and are talking about helps the companies to better serve, communicate and build a meaningful relationship with them. In other words, using Big Data helps travel companies in delivering customer-centric marketing5.

 

Picture from Unsplash.com

 

I personally regard that the issue of travel companies is not the ability to collect customer data, but rather how to make sense of it and utilize it in a customer-centric manner. The answer lies in data mining techniques, such as RFM-model (Recency, Frequency, Monetary value), that allows marketers to better segment and analyze their customers6. Daqing Chen, Sai Laing Sain and Kung Guo conducted a case study using data mining techniques to help a UK online retailer to better comprehend its customers, and as a consequence, practice customer-centric marketing more effectively. RFM-model formed the foundation of the study by segmenting the customer groups, but also techniques such as K-means clustering algorithm and decision tree induction were used to gain information about the key customers7. With the help of the research, they were able to find the most valuable customer groups and identify key features of them. The results provided valuable data for the companies that can be used for customer-centric marketing to personalize the communication with each customer segments.

Aforementioned data mining techniques can similarly be used for tourism companies to identify the key characteristics of various target groups and to become aware of the most valuable customers. Understanding these key customers, and providing them with personalized content and communication will subsequently open doors for building stronger relationships and ultimately even customer loyalty.

 

#2 Enables informed tactical and strategic marketing decision-making

One of the most important skills of data-driven marketers is the ability to comprehend business analytics. As Kean, Prentice, and Ferguson refer, analytics means “the use of data and related business insights developed through applied analytical disciplines … to drive fact-based planning, decisions, execution, management, measurement and learning.” Making use of business analytics can provide valuable insights in marketing strategic-decision making by utilizing its three functions: descriptive (i.e. understanding the past and current business performance), predictive (i.e. predicting future performance) and prescriptive (i.e. identifying the best alternative to achieve business objectives) analytics9. Exploiting these various analytics interchangeably will help travel companies to make more informed marketing decisions in a tactical and strategic level.

 

Picture from Unsplash.com

 

Wolfram Höpken, Tobias Eberle, Matthias Fuchs and Maria Lexhagen studied how autoregressive time series forecasting approach (i.e. prediction based on past arrivals alone) together with travellers’ web search behaviour can be used for predicting tourist arrivals. More precisely, the study was conducted for Swedish mountain destination Åre using the arrival data and Google Trend-based search data from a time period of 2005-2012 of four major target markets (i.e. Denmark, Finland, Norway, and the United Kingdom)11.

The findings revealed that the travel-related search queries indicate the opportunity to increase the accuracy of predicting tourist arrivals compared to using only past arrivals. The results also showed the various travel planning and search behaviours of the studied target markets. For instance, Finnish travellers started first searching for lodging options in Åre, followed by the destination queries as a whole. The closer the arrival of the Finnish tourists came, the more skiing-oriented the search queries became. These insights imply that these results can be used in marketing to better understand the market trends and the decision-making process of tourists11. Therefore, travel companies that are collecting similar data can steer their tactical and strategic marketing approach to reflect the data. To use such data for the personalization of the interactions, more informed targeting and segmentation of the key customer segments will assist in creating valid and justified marketing tactics and strategies, which eventually lead to increased business opportunities.

#3 Increases profitability

When a company collects sufficient amount of relevant marketing data of its customers and executes it as a part of its tactical and strategic marketing approach in a customer-centric manner, the likelihood of driving successful marketing performance is obviously much higher. As a consequence, marketers should harness big data by engaging in data-driven marketing to assist travel companies in detecting the right customers to attain profitable business outcomes. Applying DDM in decision making improves effectiveness and optimizes the return on marketing investment (ROMI). Moreover, DDM techniques focus on the analysis of internal and external data of the company. By integrating the information into valuable insights, travel companies are able to acquire new customers or strengthen the relationship with existing ones. Eventually, this can result in reduced costs and an increase in the company’s productivity and efficiency2.

 

Picture from Unsplash.com

 

In 2012 Columbia Business School surveyed 253 corporate marketing executives, with a purpose to find out the changing practices among large corporate marketers (90% of the corporates had global annual revenue of over $50 million) in the following areas: data collection and usage, marketing measurement and ROI (return on investment), and the integration of digital and traditional marketing12. The found out that nearly all (91%) believed that successful brands use customer data to drive marketing decisions. In addition, 70% regarded that their marketing practices are more informed than ever before and that they are aware of the need to justify the decisions financially. The somewhat contradictory result to this was that 57% of the respondents were not basing their marketing budgets on any ROI analysis12. In my opinion, this suggests that even though their marketing was conducted largely on the basis of data, its contributions in terms of monetary value were not evaluated. This is problematic as in this case the marketing practices are more inclined towards “gut-feeling” than on real monetary value. The practices that are based on historical data and can indicate to be increasing ROI are invaluable for the managers in any business. To conclude, being able to verify marketing ROI on the basis of past and predictive data should be regarded highly by the travel business marketers to make right and cost-effective decisions.

Make data-driven marketing in tourism your competitive edge

By now you should be able to understand what the phenomena of data-driven marketing means and be more familiar with some of its interrelated concepts. Most importantly, you are now aware of its capabilities and of the three key benefits it provides for travel businesses. As a conclusion, in order for travel companies to flourish and differentiate from the competitors in the era of Big Data, the data-centric approach needs to be taken into the centre to make informed marketing decisions to satisfy the ever-demanding customer needs. Not only will it enable to gain a competitive edge over others, but also increase the cost-effectiveness and ROI of the marketing approaches.

Acknowledgements

This blog post was written as a part of the Information Technology in Tourism Business course at the International Master’s Degree Programme in Tourism Marketing and Management (University of Eastern Finland Business School). Read more about the programme at https://www.uef.fi/tmm

References:

1 Camilleri, M.A. 2019. The Use of Data Driven Technologies in Tourism Marketing. In Ratten, V., Alvarez-Garcia, J. and De l Cruz Del Rio-Rama, M., Entrepreneurship, Innovation and Inequality: Exploring Territorial Dynamics and Development, 1st Edition, Routledge, Oxford, UK.

2 Grandhi, B., Patwa, N. & Saleem, K. 2020. Data-driven marketing for growth and profitability. EuroMed Journal of Business. Vol. ahead-of-print No. ahead-of-print.

3 Shah, D, & Murthi, B. P.S. 2020. Marketing in a data-driven digital world: Implications for the role and scope of marketing. Journal of business research. Vol. ahead-of-print No. ahead-of-print.

4 Lazer, D., Pentland, A., Adamic, L., Aral, S., Baraba´si, A., Brewer, D., Christakis, N., Contractor, N., Fowler, J., Gutmann, M., Jebara, T., King, G., Macy, M., Roy, D. & Van Alstyne, M. 2009. Computational social science. Science, vol. 323, no. 5915, pp. 721–723.

5 Camilleri, M.A. 2015. Using Big Data for Customer-Centric Marketing. In Evans, C. (Ed) Handbook of Research on Open Data Innovations in Business and Government, IGI Global, Hershey, USA.

6 McCary, J.A. & Hastak, M. 2005. Segmentation approaches in data-mining: A comparison of RFM, CHAID, and logistic regression. Journal of Business Research 60 (2007) 656–662.

7 Chen, D., Sain, S. L., Guo, K. 2012. Data mining for the online retail industry: A case study of RFM model-based customer segmentation using data miningJournal of Database Marketing & Customer Strategy Management. 19 (3), 197-20.

8 Kiron, D., Prentice, P. K., & Ferguson, R. B. 2014. Raising the bar with analytics. MIT Sloan Management Review, 55(2), 29–33.

9 Kunc, M., & O’Brien, F. A. 2018. The role of business analytics in supporting strategy processes: Opportunities and limitations. Journal of the Operational Research Society Published Online.

10 Kumar, V., Chattaraman, V., Neghina, C., Skiera, B., Aksoy, L., Buoye, A., & Henseler, J. 2013. Data‐driven services marketing in a connected world. Journal of service management. 24 (3), 330-352.

11 Höpken, W., Eberle, T., Fuchs, M., & Lexhagen, M. 2018. Google Trends data for analyzing tourists’ online search behavior and improving demand forecasting: the case of Åre, Sweden. Information technology & tourism. 21 (1), 45-62.

12 Rogers, D., & Sexton. 2012. Marketing ROI in the Era of Big Data. The 2012 BRITE/NYAMA Marketing in Transition Study. Accessed on the 1st of November 2020. https://www.iab.com/wp-content/uploads/2015/05/2012-BRITE-NYAMA-Marketing-ROI-Study.pdf.

 

 

Self-employed Business Owner: Why Learning Basics of Digital Marketing Saves you Money while Growing your Business?                                                                                                 

Are you preparing cottage rooms for next guests? Driving dog sledge through low-lying arctic hills? Preparing dinner for a group of visitors? If you’d take less than 10 minutes of your time to read through this blog post, I can promise you’ll be even busier after few months’ time.

So, do you have time to talk about getting better return to your hard-earned money that you put to marketing? Especially if the marketing and digital marketing frustrates you at the moment. I know – I’ve been there. And now I’m writing this blog post to You.

Most of the small tourism companies do have web pages and they are in the Facebook, but it doesn’t automatically mean that your customers will find you. You can be like the wall paper that is in the store but cannot be found. Or even like a pretty nice looking wall paper put on display but still don’t get customers’ attention. In order to break through from “the lost wall paper corner of internet” and get the awareness you deserve from potential customers, I recommend to consider the following three things:

  • What are the key words that your webpage is optimised for?

    Key words are crucial “tags” to help search engines like Google to find your web page when your potential customers are searching for services that also your company offers. Key words help your web page appear in the first page of Google search results. Also having links to other relevant web pages serve the same purpose.

  • Content is the King! 

    …in all channels. I understand that you don’t have time to be in Facebook or in other channels every day and figure out what you should post or write. You have real customers to serve. To make this easier to yourself make a list or even a calendar. Just listing what you’ll update and when keeping it simple and realistic. You don’t have to go from no activity to ten activities during a week at once. Good content frequently is ok. The content can be e.g. photos, happy customers (with their permission), positive customer feedbacks (testimonials) or even something cleaver about the weather. And of course, customers want to get to know you. Tell your story – in the extent that you feel comfortable with.

    While you are posting photos in Facebook you can do that as well in Instagram. You can open an Instagram page for your business here: https://www.instagram.com/accounts/login/. In Instagram use those hashtags (#) with the words you want your business to be connected with.

By to way, all those likes, shares and comments in your social media pages are worth money. This is not online marketing basics anymore, but if you are interested in deepen your knowledge you can listen more about this here: https://www.youtube.com/watch?v=Im26jZT-eQw. I promise, this is useful.

  • Get to know the magical place of Google Analytics

Measuring outcomes of our actions is as relevant in digital marketing as it is in other areas of the business. Addition to the fact that it shows you how well did you succeed, that you don’t end up buying possibly too expensive marketing actions which don’t deliver what you hoped them to. Useful tool to follow up your online marketing actions is Google Analytics. See easy first steps to take to get started here: https://www.youtube.com/watch?v=lZf3YYkIg8w.

Optimising your web page so that customers find it is the first step. But as a second step you can make advertisements online to boost your visibility. Just remember to have proper web page before you advertise it: updated, relevant information to customers and possibility to buy your services, if the online selling is relevant for your business model. There are free tools to test the quality of your web page like this one: https://www.seoptimer.com/. They also give recommendations to improve your site.

 

If you got at least a little bit interested in, please Google your business – not with the name of the business, but with some other words that you’d use as a customer looking for the kind of services your business offers. If you find your business web page from the first page and your competitors are below you in Google search results, you have done something right. Congratulations! If you, on the other hand, find yourself from the second or the third page in Google search results, you’ve been able to hide your business to the place where no one looks – to the lost wall paper corner of internet. But don’t worry, you can break out from there by getting started with the steps described in this article. If you find this difficult or you just don’t have time for it, you can buy this as a service. And now you have better understanding what you are paying for.

Get a master’s degree in tourism business

Are you looking for an international tourism-focused master’s degree programme in business? Tourism Marketing and Management programme by University of Eastern Finland provides a unique learning experience for students who have finished their bachelor’s degree and are looking for new skills and knowledge in developing tourism industry in a sustainable way. Read more about the programme at www.uef.fi/tmm.

SMEs should use web analytics for competitive advantage

A first semester studying Tourism Marketing and Management at UEF showed that most of the tourism companies in Finland are small-to-medium enterprises (SMEs).  These companies are trying to market their offerings to consumers, by directing them to the company’s webpage to increase traffic, and hopefully future profits. In many cases, this is where the focus on the customer journey stops. Nowadays, it’s not enough for the SMEs to direct traffic to their webpage. The companies have to know what potential customers are doing there.

For various reasons, many SMEs have not considered web analytics as something that would be beneficial for future success. Everyone is online nowadays and many make most of their purchase decisions using at least some kind of online materials. For SMEs it is especially important to think long and hard, where and how to spend the marketing budget. Without the use of web analytics, it is next to impossible for them to properly analyse the results of their marketing campaigns.

The traditional view of web analytics is that it is only for giant companies, SMEs should steer away from this kind of thinking. The presumption is entirely misleading. All companies can and should use web analytics tools! Without web analytics tools, it is difficult to see the results of marketing campaigns. Analytics give SMEs insight into what they’re doing right and what could be improved.

There are many different web analytics tool out there. Understandably, it might be confusing for entrepreneurs to get started. For tracking traffic and conversions companies could start using Google Analytics. From Google Analytics, SMEs can get a huge amount of data. This tool is highly beneficial for tracking the success of various marketing campaigns. Web analytics can also be used to track the performance in social media. Many customers nowadays use social media to form an overview of the company that they are buying from. Many social media platforms offer the tools to track the company’s performance. There are no reasons for SMEs not to use these tools.

The use of web analytics tools helps SMEs to understand their customers and this way develop competitive advantage! You can do digital marketing without analytics, but the only way to get the best bang for your buck is to connect your digital marketing efforts to digital analytics.

Get a master’s degree in tourism business

Are you looking for an international tourism-focused master’s degree programme in business? Tourism Marketing and Management programme by University of Eastern Finland provides a unique learning experience for students who have finished their bachelor’s degree and are looking for new skills and knowledge in developing tourism industry in a sustainable way. Read more about the programme at www.uef.fi/tmm.